Fitch Affirms Three Classes of Continental Aircraft-Backed Debt; Outlook Stable

NEW YORK—(BUSINESS WIRE)—Fitch Ratings has affirmed the ratings of three classes of Continental Airlines’ aircraft-backed debt as follows:

Aircraft Indebtedness Repackaging (AIR) Trust 1998-1

—Class A at ‘B+’; Outlook Stable.

Aircraft Indebtedness Repackaging (AIR) Trust 1998-2

—Class A at ‘B+’; Outlook Stable.

Continental FEATS Series 2000

—Class A at ‘BB+’; Outlook Stable.

The affirmation of the AIR Trust ratings reflects Fitch’s view that the notes could not withstand a ‘BB’ category stress (defined by aircraft value declines of 45% to 55%) in a bankruptcy scenario where the obligations may be rejected by Continental (now a wholly-owned subsidiary of United Continental Holdings, Inc.).

The collateral for both AIR Trust issues consists of a single Boeing B757-200 aircraft. Fitch classifies older B757-200s as Tier 3 models, which are the least marketable and liquid in a distress scenario. While loan to value (LTV) ratios on the transactions have fallen as a result of amortization, collateral coverage is not sufficient to meet a ‘BB’ category stress level under Fitch’s EETC rating methodology.

The affirmation of the FEATS transaction rating reflects Fitch’s opinion that the Class A notes can withstand a ‘BB’ category stress on aircraft market values, covering outstanding principal, a full draw of the 18-month liquidity facility and re-marketing costs in a post-rejection default scenario. The ‘BB’ category stress is defined under Fitch’s EETC rating methodology as a value decline in the range of 45% to 55% for older B767-200ERs (Tier 3 aircraft) and a stress of 10 to 20% for B737-800s (Tier 1 aircraft).

All three transactions have limited amount of time left until maturity. AIR Trust 1998-1 and 1998-2 are set to mature in February and March of 2013 respectively. FEATS is set to mature in November 2012. Fitch expects all transactions to be paid off in cash upon maturity.

Additional information is available at ‘www.fitchratings.com’. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.